Swiss Re said that it has transferred a block of US individual life reinsurance business to Berkshire Hathaway, in a move that is expected to increase the Swiss firm's capital efficiency.
Under the terms of the contract, Swiss Re will, on a 100% quota share basis, reinsure a closed block of yearly renewable term individual life reinsurance business, written prior to 2004, with Berkshire Hathaway Life Insurance Company of Nebraska.
Swiss Re said that it will receive a ceding commission in the region of CHF1.3bn and will release CHF0.3bn of capital to support the business. The company will continue to provide administration and reporting services for the subject business.
The firm said that the proceeds and capital released by the transaction can be employed to achieve a higher return. It expects to gain stronger position through the transaction, to respond to the rising demand for reinsurance solutions.
Christian Mumenthaler, head of Life and Health at Swiss Re, said: “This is a significant step forward in Swiss Re’s strategy to increase capital efficiency. By transferring this block of life business, Swiss Re is monetising intangible assets and freeing up capital. The transaction puts us in an excellent position to redeploy the capital at more attractive returns.”